On Wednesday night, Donald Trump celebrated his impeachment with a rally in Battle Creek, Michigan.
Less than 48 hours later, US Steel said it will “indefinitely idle” a significant portion of its Great Lakes Works operation near Detroit, starting “on or around April 1, 2020”.
Around 1,545 workers will be affected, although the company said it “anticipate[s] the final number of employees… impacted by the idling will be lower”. Also “lower” are the beleaguered shares, which plunged on Friday.
Since Trump’s metals tariff announcement (aimed at revitalizing US industry and ushering in the manufacturing renaissance he promised on the campaign trail), the stock is down almost 75%.
The company’s struggles are well-documented, and layoff news and rumors have been something of a fixture. Its operations are generally behind the times, something Wilbur Ross underscored in an interview with Bloomberg TV on Friday, calling the affected plants “high-cost facilities”.
“We are conscious of the impact this decision will have on our employees, their families, and the local community, and we are announcing it now to provide them with as much time as possible to prepare for this transition”, CEO David Burritt said, adding the following:
These decisions are never easy, nor are they taken lightly. However, we must responsibly manage our resources while also strengthening our company’s long-term future — a future many stakeholders depend on. We will be taking steps in the weeks and months ahead to assist impacted employees by providing additional education about benefits available through our company, as well as community resources.
The plans are part of an ongoing effort to reshape the company’s operations, modernize and improve competitiveness. On Thursday evening, the company cut its dividend, slashed capex and said it would lose an adjusted $1.15 a share in Q4.
Obviously, there are myriad nuanced takes on this from Wall Street, where the focus isn’t on workers or optics, but rather on whether and to what extent US Steel’s efforts to streamline and reposition itself are viable.
But for Trump, this is unequivocally bad. He barely won Michigan in 2016, and beyond that, this isn’t a great look for the tariffs.
Since the onset of the trade war, analysts and economists have variously warned that Trump was grossly underestimating how daunting a task rewriting the rules of global trade and commerce was likely to be. That skepticism, along with the common sense assessment that says revitalizing struggling domestic industries can’t possibly be as simple as slapping on tariffs and patting oneself on the back as the renaissance unfolds, informed the opinions of those who suggested the administration’s policies would be a dead end.
Just months after the metals tariffs were announced, US Steel restarted a pair of blast furnaces in Granite City, Illinois. “After careful consideration of market conditions and customer demand, including the impact of Section 232, the restart of the two blast furnaces at Granite City Works will allow us to serve our customers’ growing demand for high quality products melted and poured in the United States”, Burritt declared, in a press release dated June 5, 2018.
Fast forward 18 months, and he was singing a markedly different tune.
“Current market conditions and the long-term outlook for Great Lakes Works made it imperative that we act now”, he said, announcing the prospective layoffs.
“We love our steelworkers”, Trump told a crowd during a veritable party convened to celebrate the Illinois plant’s reopening last year. “After years of shutdowns and cutbacks, today the blast furnace here in Granite City is blazing bright, workers are back on the job, and we are once again pouring new American steel into the spine of our country”, the president bragged.
And yet, even Granite City – an ostensible model of success for Trump’s protectionism – labors under a cloud of uncertainty. An outstanding Bloomberg profile published this week underscores just how tenuous the situation is.
“You’ll never really compete against China, even though they do have tariffs in place”, a worker who was able to lock in his pension thanks to the restart of the blast furnaces told Shawn Donnan and Joe Deaux. “I mean, how do you compete with labor costs and emission costs and pollution control, which they don’t have?”
